How are the fourth and fifth self-employed grants different?

Chancellor Rishi Sunak confirmed at the Budget earlier this month (Wednesday 3 March), the fourth Self Employed Income Support Scheme (SEISS) taxable grant will be set at 80% of three months’ average trading profits, paid in one single instalment and capped at £7,500 – as the previous grants have been.

It will take 2019 to 2020 tax returns into account and will be open to operators who became self-employed in the tax year 2019 to 2020. The rest of the criteria for eligibility remains the same.

The eligibility for the fourth grant will be based on the submitted 2019 to 2020 tax return. It could mean the amount received in this latest round of funding could be higher or lower than previous grants received.

In regard to who can claim, operators must be a self-employed individual or a member of a partnership.

Eligibility criteria

Trading profits must be no more than £50,000 and at least equal to operators’ non-trading income. If self-employed workers are not eligible based on the 2019 to 2020 self-assessment tax return, HMRC will look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020.

Those applying must have also traded in tax years 2019 to 2020 (and submitted their tax return by 2 March 2021) and 2020 to 2021.

They must either be currently trading but impacted by reduced demand due to coronavirus or have been trading but temporarily unable to do so because of the pandemic.

They must also declare they intend to continue to trade and reasonably believe there will be a significant reduction in trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus.

Operators will be able to claim the fourth grant via the online claims service from late April until 31 May.

If eligible, HMRC will contact operators mid-April to provide a personal claim date and this will be when they can make the claim from.

Fifth SEISS grant

However, the fifth grant, which will cover May to September, differs from the previous four in how it is calculated.

If eligible, operators will be able to claim this grant from late July and it will be determined by how much turnover was reduced in the year from April 2020 to April 2021.

It will be worth 80% of three months’ average trading profits, capped at £7,500 but this will be for businesses that saw a turnover reduction of 30% or more.

For operators who were impacted by a reduction of less than 30% in the same time period, the grant will cover 30% of three months’ average trading profits, capped at £2,850.

The Government has stated further information about this grant and the fourth grant will be provided in due course.